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Fan Yang

Yelp Pulling Back After a Bullish Breakout - Buy-The-Dip Candidate?

Yelp $YELP recently surged after the market saw improved earnings and strong guidance in the latest earnings report. Yelp was already in a bullish trend since 2016, but has been consolidating for about year since August 2017. Price action looks ready for a bullish run after breaking the consolidation range resistance last week.

YELP Daily Chart

(click to enlarge)

Breakout and Pullback:
- The daily chart shows price break above a consolidation range, but pullback during the 8/13 session.
- A bullish market will probably support price above the $46 pivot. 
- But even if price pulls back towards  $42-$43 area, support there would confirm a bullish outlook.
- A break below $42 would likely translate to a bearish scenario - a false bullish breakout would suggest bears are in charge.
- The RSI should stay above 40 in the bullish scenario. A more aggressive bullish run might even keep the RSI above 50
- If the overall market is tentative, we should probably wait for a deeper pullback than $46, and instead around $42-$43 before considering buying-on-the-dip.